The importance of seeing for yourself
Canadian retailer says personal inspections of overseas factories needed to ensure safety
The Umbra warehouse in Scarborough used to be a factory, but when the Canadian dollar began climbing in value, the owners moved manufacturing to China to maintain profit margins.
The former factory floor at Umbra in Scarborough is now filled with product for sorting and shipping, and president Les Mandelbaum visits Asia — a lot.
He estimates he’s been to the continent more than 75 times to inspect the factory Umbra operates in Shenzhen, and other facilities where Umbra products are made under the Umbra brand, or as private labels for retailers including Lowe’s, Walmart, Target, Home Outfitters, Winners and Bed Bath & Beyond.
“A lot of them are in out-of-theway areas, they don’t have hotels you’d want to stay in, the food is bad, it’s dirty and uncomfortable,” said Mandelbaum. “But unless you’re there yourself, you cannot be satisfied that it’s a safe environment and a compliant environment.”
In the wake of the recent tragedy in Bangladesh, in which at least 500 people died after a factory collapsed on April 24, retailers are asking what they can do, and what others should be doing, to ensure worker safety overseas. Among the first pictures to emerge from the disaster was a pair of Joe Fresh shorts in the rubble, putting the brand and parent Loblaw Companies Ltd. into the spotlight. Loblaw executive chairman Galen G. Weston and Joe Fresh creative director Joe Mimran have announced new measures, including building-integrity audits and putting Canadians on the ground in Asia reporting directly to Canada on factory conditions.
Although Joe Fresh had an auditing process in place, experts say such audits aren’t always enough. “We always talk about alleviating risk as much as possible, because how do you get rid of it entirely,” said Jack Cochrane, sales and marketing manager at the North American headquarters for Bureau Veritas, one of the largest auditing firms in the world, and the one used by Loblaw Cos.
While there are countries with significant auditor-integrity issues, companies such as Bureau Veritas have developed robust anti-corruption programs, sending out auditors to check the work of factory inspectors, said Michael Lavergne, who has worked for more than 20 years developing offshore supply chains for clients. Some factories are inspected 12 to 20 times a year, Lavergne said. There is also the problem of varying standards — there are apparel industry standards and international labour standards, for example — although there is a move afoot to establish international standards. “Audits are a tricky thing. It’s one of a number of tools, but it shouldn’t be a stand-alone tool,” said Lavergne, who is working on a book about the offshore industry. And as the building collapse in Bangladesh has shown, the kinds of audits being conducted until now are not always enough. Current audits focus on whether a factory is technically able to produce the goods, and on whether employees are being paid enough and are working reasonable hours. As Mimran pointed out this week, there were no audits being conducted for the structural integrity of buildings, something that will now be required for factories doing business with Loblaw brands.
Besides, said Lavergne, it shouldn’t be up to a single brand or retailer to enforce building standards in Bangladesh.
“Really, the responsibility for ensuring proper engineering and construction standards are local governments. Here is where Canada and the European Union can pressure the Bangladesh government, because both Canada and the EU have given Bangladesh duty-free status.
“The governments have a responsibility in this.”